EIGF

Few Keynotes For Reform Measures In 2018-2023 In Mining, Oil & Gas In Cambodia

Maybe last mandate was excited for many who have actively engaged in a reform program for this important extractive industry sector in Cambodia. Many remarkable and plausible progresses were achieved, especially in the areas of revenue collection, institutional reform and more importantly the establishment of the EIGF – Extractive Industry Governance Forum, a single mechanism of its kind in Cambodia for engaging multi-stakeholders in governance process of the industry. In other areas, results were (more or less) mixed, disappointment or unsatisfactory. Now, this new mandate is even more promising to be more excited, or maybe, who knows? The new mandate is referred as “Years of Harvest” by the Mines and Energy ministry. But, what are the constituents of the said harvest and how this can be significant to the nation?

This 2018-2023 will be the important milestone of the extractive industry of Cambodia. It will be a beginning of whether this country will be really blessed or cursed by this industry. A huge foreign investment inflow will be expected as the sector will embark with the below emergence:

  • a starting of few industrial scale mining operations planned for 2018-2019;
  • the full capacity running of cement producing plants;
  • increasing demand of construction materials due to economic growth;
  • a starting of Block A oil production; and
  • an emerging opportunity for petrochemical and gas industry including household gas supply.

How the country is coping with this development and industrialization is very crucial for her future to whether a full benefits from her natural resources endowments can be materialized. Such industrialization will bring great economic opportunity but Cambodia must at least ensure that the country can achieve the following:

  • optimized size and scale of national fiscal collections;
  • improved livelihood of local communities nearby industry sites; and
  • sustained quality of natural environment and public welfare.

To achieve this, some serious deep sector reform is needed, on all aspects from legal, institutional, human capital and quality, and, overarching political principles. An inclusive approach of governing the sector must be put in place and maintained in meaningful way. There is four key reform measures that the ministry maybe considering for endorsement with full commitment. Those are described as below.

1. Compliance Enforcement Measures:

The key output of this measure is all kind of illegal mining operations must be eliminated and all mining operations are complied with generally adopted international practices of the industry. Key actions shall be:

  • Building capacity of competent personnel responsible for enforcement and strengthening enforcement by court measures;
  • Improving effectiveness of action team for illegal mining crackdown in cooperation with national committee for preventing and cracking down natural resources abuses; and
  • Improving technical standards and code of conducts for responsible mining operation.

2. Revenue Collection Measures:

Mining bears great potential for fiscal collection. The following key actions should be required to enhance such collection:

  • Introduction of better transparency and accountable process of licensing
  • Strengthening integrity in royalty and fiscal payment declaration together with establishment of a proper Check & Balance mechanism for evaluating economic performance of a mining operation
  • Forster implementation of fiscal and non-fiscal revenues collection policy of the government

3. Environmental & Social Safeguards:

Addressing environmental and social issues in mining sector required sound quality of decision regarding evaluation of impacts, environmental impact mitigation and prevention plan, reliability of local community participation and empowerment, and, implementation any real community development projects within the locality of the industry site. Some key actions below are necessary to achieve this objective:

  • Improving quality and effectiveness of preliminary socio-economic assessment and mineral zoning master plan before licensing process can be undertaken;
  • Improving quality and reliability of information on economic potential of the mineral endowment and professionalism of socio-economic cost and benefit evaluation of a mining proposal;
  • Adoption and enforcement of clear environmental targets/milestones for each mining operations with proper monitoring and evaluation mechanism;
  • Enhancing engagement and participation of local communities in planning and decision processes related to environmental and social safeguards; and
  • Scaling up implementation of mining social fund for local community development.

4. Multi-Stakeholder Partnership:

A move toward inclusive governance approach in extractive industry will greatly help reducing distant between government and communities as well as other key stakeholders including civil society organizations. It will also help mutual understanding and building critical partnership among stakeholders to ensure optimal distribution of benefits and reducing conflicts. Some key actions must be considered are:

  • Enhancing function and role of existing EIGF mechanism;
  • Improving public relation and communication strategies aiming at increasing public disclosure and promoting transparency;
  • Improving effective responsiveness of recourse mechanism and community consultation processes; and
  • Fostering implementation of local content policy.

Those are in brief of all top priorities that the ministry maybe considering to engage in its action for the whole period of 2018-2023. Challenges to realize these reform measures are huge, but the renewed commitment of the government with those well-known five guiding principles of SPM, “take shower-clean up-look at mirror- healing- and- surgery”, will be the most important in determining success of such reform.

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